JCT Design & Build 2024: what you need to know

We hosted a webinar on 25 April looking at the recently published 2024 edition of the JCT Design & Build Contract (“D&B Contract”) and it was great to see so many of you there. For anyone unable to attend and as a reminder, the key points covered were as follows.

Summary

The latest changes reflect the continuing evolution of the JCT suite. However, the amendments to the 2016 edition of the D&B Contract are very limited and there are no real surprises or fundamental changes for anyone familiar with the previous iteration. In any event, in practice unamended JCT contracts are seldom issued by employers in connection with significant projects and many of the new changes are therefore likely to be overridden by schedules of amendment (particularly around design responsibility and the Building Safety Act).

Modernisation and inclusivity

The JCT have now adopted gender neutral language throughout the D&B Contract (and presumably the remainder of the suite). This change brings the JCT in line with NEC4 and FIDIC contracts as well as many of the published professional appointments.

The D&B Contract also now adopts a default position which allows most notices to be served by email, including payment notices under clause 4 and communications related to Changes under clause 5. Any such notice is served when ‘sent by email’ to the other party’s notified email address. The previous rules governing the specific notices identified in clause 1.7.4 (relating to third party rights and termination) have been similarly updated and the parties may now specify email service for those notices, although such notices are deemed to be served on the Business Day following sending.

Sustainability

One theme which emerges from the 2024 update is the ‘promotion’ of certain previously optional supplemental provisions into standard clauses. An example of that is new clause 2.1.5 dealing with sustainability improvements which largely mirrors Supplemental Provision 8.1 in the 2016 Edition.

This is the lightest touch of amendments on sustainability – the Contractor is “encouraged” to suggest economically viable improvements to environmental performance and sustainability if instructed by the Employer. There is no clear obligation on contractors to identify and propose such improvements, nor on the Employer to consider or to instruct them. In addition, the new proviso at the end of clause 2.1.5 expressly states that any such Change instruction shall not increase the Contractor’s design liabilities. That perhaps seems odd in a design and build arrangement given that the Employer will be responsible for the time and cost consequences of any such instruction. We do not expect that the proviso will survive most schedules of amendment issued at tender stage.

Supplemental Provision 8.2 from the 2016 editions is also now promoted to clause 2.2.2 and requires the Contractor to provide such information relating to sustainability as the Employer may reasonably require in respect of materials and good specified by the Contractor. This obligation will likely extend to materials specified by a sub-contractor (and is flowed down in the 2024 Design & Build Sub-Contract Conditions).

Good Faith

Supplemental Provision 5 dealing with ‘collaborative working’ now appears at Article 3 and requires the parties to work “with each other and other project team members in a co-operative and collaborative manner, in good faith and in a spirit of trust and respect”. The parties are also required to support collaborative behaviour and address behaviour which is not collaborative.

There are clearly parallels with the obligation for parties to work in a spirit of “mutual trust and co-operation” under NEC contracts, but it will be interesting to see how this overarching obligation interfaces with other express provisions of the D&B Contract and case law around implied and express good faith obligations.

In addition, the first stage in dispute resolution is now a referral to ‘senior executives’ of each party who should meet for ‘direct, good faith negotiations’ to seek resolution. Obviously, those obligations are subject to the statutory right to adjudicate. This is another previously optional provision (Supplemental Provision 10) now included as a standard clause.

Extensions of time, loss and expense

The 2024 update imposes two new obligations on employers concerning extension of time claims. Firstly, the Employer is required to request further information which is reasonably required to make an assessment within 14 days from receipt of the Contractor’s particulars of delay (cl 2.24.4). Secondly, the Employer should make an assessment of any extension of time claim within 8 weeks from receipt of particulars or, if requested, such further information (cl. 2.25.2). Neither obligation formally operates as a time bar on the Employer’s rights, but both are clearly intended to signal a more even-handed approach and protect contractors from long delays in assessment, which can have a serious impact on cash-flow.

There is a new ground for extensions of time covering pandemics which occur, or which have new impacts occurring, after the Base Date, and which directly impact on the supply or availability of personnel, goods and materials (cl. 2.26.7). The position largely reflects the consensus which emerged in the wake of the Coronavirus pandemic that direct impacts should be treated as ‘force majeure’ under clause 2.26.14 of the 2016 contract.

In addition, the existing grounds dealing with changes in law and adverse ground conditions have been expanded. In respect of changes in law, the most significant change from the 2016 position is that the publication of guidance affecting the works by statutory bodies or by the Construction Leadership Council (“CLC”) after the Base Date is now included (cl 2.26.8). Again, this change probably reflects the Coronavirus pandemic and addresses the ambiguity around CLC guidance during that period.

However, the most significant change here is in relation to ground conditions where the existing position on antiquities now also applies to the discovery of asbestos, contaminated materials and unexploded ordnance on site (cl. 2.26.4 and 3.15). In each case, the Contractor must avoid disturbing the material – stopping work if necessary – and the Employer must issue instructions under clause 3.15 which are a Relevant Event. This is a limited exception to the general rule under the D&B Contract that contractors carry the risk of adverse physical conditions.

In a new approach for JCT contracts, both epidemics and changes in law may also constitute Relevant Matters (allowing contractors to recover loss and expense) by selecting the relevant options in the Contract Particulars.

Design liability and fitness for purpose

For the first time, the D&B Contract includes an express exclusion of fitness for purpose obligations in respect of Contractor design (cl. 2.17.1.2). To the extent that it survives schedules of amendments, this provision will be welcomed by contractors and their insurers. Parties should, however, bear in mind that the exclusion does not necessarily extend to specification obligations included by way of common amendments at clause 2.2 and is also subject to any relevant Statutory Requirements.

Termination and liquidated damages

The D&B Contract includes new and useful detailed provisions dealing with payment flows following termination which should be easier to operate in practice than the regime under the 2016 and previous contracts (cl. 8.13).

The automatic termination of sub-contracts is now expressly subject to the exercise of Employer and funder step-in rights (cl. 3.4) and, reflecting the 2021 judgment in Triple Point Technology v PTT Public Company [2021] UKSC 29, the Employer’s right to recover liquidated damages ends on the effective date of termination (cl. 2.29.5.1) and is replaced by an express right to recover general damages (cl. 2.29.5.2).

The ’neutral’ grounds for termination following a prolonged period of suspension have also been expanded to include epidemics and changes in law (cl. 8.11.5 and 8.11.6).

Conclusions and missed opportunities?

The changes in the 2024 edition are likely to be a good indication of the direction of travel in the JCT standard building and intermediate building contracts and in the anticipated target cost contract. The changes are limited and perhaps not as extensive as many will have hoped on sustainability and ground condition risk in particular. In many respects, the new edition appears to reflect compromise positions reached during the review and drafting process.

The amendments reflecting the Building Safety Act are very light touch and do not address concepts such as the golden thread, approval gateways or higher risk buildings. The JCT’s approach of identifying duty holders alongside the CDM duty holders allows for streamlined drafting but perhaps underplays the significant differences between the two regimes. For more on the BSA and related issues see our Building a Safer Future site and May webinar.

The limited changes around ground conditions are sensible but the JCT could have introduced more flexibility and a more balanced risk profile here, particularly when works involve existing properties. Similarly, the ‘Option C’ insurance options and associated drafting are unchanged from the 2016 edition.

Finally, the JCT has for the first time acknowledged that the parties may wish to include a sensible cap on the Contractor’s liabilities and provided example drafting. Those provisions are, however, restricted to a footnote and the JCT’s published guidance rather than appearing as an option in the D&B Contract itself.

If you’re interested in finding out more about the changes introduced by the 2024 edition of the JCT suite of contracts, please register for our June webinar.